Risk management is an important component of any business processes, regardless of the scope of the company. Today we will talk about the use of risk management by gambling companies in the field of gambling to minimize the impact of negative factors of the external and internal environment on their business.
В любой предпринимательской деятельности всегда существуют риски потерь и убытков, которые невозможно исключить полностью. Однако, как показывает многолетний опыт работы компаний в разных сферах деятельности, благодаря проведению анализа бизнес-процессов удается своевременно выявлять всевозможные неблагоприятные факторы и принимать меры к их ликвидации или минимизации. Такие действия называют риск-менеджмент (от англ. risk management).
Уникальность риск-менеджмента заключается в универсальности его инструментов, которые подходят для применения в разных сферах деятельности с поправкой на особенности каждой из них. Например, управление валютными рисками отличается от управления рисками в спортивных ставках.
There are manageable risks in the gambling industry related to the following problematic issues:
Quite often, attracting new suppliers or other third parties carries risks for companies. To analyze such situations, analysts from Enhanced Due Diligence conducted a study of 60 B2B reports, which include gambling companies from different geos: Europe, Asia-Pacific, the Middle East, America and Africa.
The results showed that there are 5 top B2B risks that are already regulated in many countries.
reputational risk. It occurs when the company is covered negatively in the media, which entails damage to the reputation, good name, brand image.
financial risk. It implies possible loss of funds, in particular, due to fines for violations.
regulatory risk. It arises due to the application of administrative measures and fines, which may entail the risk of receiving negative reviews or refusal to issue a license.
Cyber risk. This is the loss of important data or a breach of security as a result of an opaque B2B relationship.
Risk transparency. Occurs when non-compliance with the requirements of AML (anti-money laundering) in the fight against the financing of terrorism and money laundering.
According to experts, risk assessment should include three standard stages: identification, analysis and assessment.
Only a comprehensive check, including the identification of a gambling operator by the regulator, and an independent check by the operator of its counterparties, can be called organized risk management.
Given the fragmented regulatory environment in the gambling industry, both the gambling business itself and regulatory authorities are exposed to risks. And as operators expand their offers of offline and online gambling in different geos, these risks will grow.
Thus, the organization of risk management must comply with all legal and regulatory requirements, both in the country of the operator and in the geo where he works or plans to operate.
With all the controversy of legislative decisions in the field of gambling, there are well-established methods and approaches that can be applied in this field of activity. So, in Russia, where gambling is allowed only in special gambling zones, the principles of good governance are well described in the national standard GOST ISO 31010 “Risk Management”.
Using the example of the following companies, let’s look at how they apply risk management tools in practice.
In the international company NetEnt, the responsibility to the owners for risk management lies with the board of directors.
Within the framework of strategic risk management, NetEnt is engaged in the development of new products, the operational study of the most profitable offers on the market and the organization of effective distribution systems.
Thus, the company makes continuous investments in IT infrastructure and staff training. This approach makes it possible to ensure a high technical level of protection and security of their systems, as well as to minimize the risks of failures.
NetEnt works closely with other gambling companies to find ways to prevent problems and actively use marketing tools to promote responsible gaming.
In anti-money laundering, NetEnt adheres to the AML policy.
When developing a risk minimization strategy, the company takes into account the following factors that can cause problems. These include:
The company is one of the world’s leading providers of live games in online casinos. However, in its activities, it is also subject to certain risks, which can be divided into three groups:
Each of the above factors can, in one way or another, affect the profit or financial position of the company, therefore, when assessing and forecasting the future of the company, it is important to consider all of them.
The company’s report says that the management of these risks requires elaboration in the following areas:
The largest and world-famous bookmaker adheres to a strategy of preventive resolution of problem situations. Such a risk management model consists in predicting risks and taking early measures to prevent their occurrence or minimize the consequences.
In addition, William Hill has a risk prioritization policy that prioritizes major potential risks, and then secondary ones that will not have a significant negative effect. After that, the company’s employees first assess potential risks that can affect the company’s activities, develop solutions based on them, and then compare them with the actual situation.
The William Hill bookmaker identifies the following risk groups:
As you can see, each of the above companies has its own risks, to minimize which risk management tools are used.
While the online gambling industry is in its infancy, it continues to evolve to achieve a high level of excellence.
Solving problems related to data security and troubleshooting technical problems comes to the fore. Moreover, this is relevant not only for a single operator, but also for the gambling industry as a whole. To solve the problem with the operation of online casino sites and other online platforms, you can apply a number of approaches, three of which we will consider below.
Simultaneous work of several platforms
Today, there are still quite often operators offering to gamble either only on the website or only through the application. However, in today’s realities of fierce competition and many offers on the market, working with only one platform, talking about stability and profitability is too risky.
In the online gambling industry, many operators are not limited to the operation of 1-2 sites. And this approach is rational, because, for example, if there is a failure or gaps in the data on the mobile platform, the players may lose interest in it and switch to another resource.
Based on this, in order to manage digital risks, companies must develop secure methods for managing both the platform and the mobile application, and make them interchangeable. For example, accounts will remain protected if the user decides to play on multiple devices.
Protection of operator and player data
Against the backdrop of mass digitalization of business processes, it became necessary to create a safer gambling environment. Therefore, today in a number of countries, in particular in Europe, regulators are working to improve legislation in the context of data protection.
So, at the beginning of 2023, the French government introduced a number of new, more stringent rules for operators regarding the identification of players. That is, now casinos must verify identity, track player accounts, check payment thresholds and perform a number of other actions.
However, on the one hand, the above measures will ensure the protection of customers of gambling establishments, and on the other hand, they will become an obstacle to the functioning of the gambling business. At the same time, the French gambling regulator has already sent the new rules to the European Council for approval.
Digital risk management in gambling
It is a firm belief for mobile and gambling developers to conduct business digital risk management is an urgent need. Practice shows that it is the use of existing tools that gambling operators successfully prevent fraudulent schemes, optimize the operation of websites and mobile applications.
According to statistics, about 85% of operators regularly encounter online fraud problems, which are mostly created by bonus hunters – players who hunt for online casino bonus offers in pursuit of getting rich quick.
The only way to solve such problems is the mandatory use of digital risk management by operators during the implementation of projects.
Part of the risk management solution for a bookmaker should be to monitor and prevent suspicious player activity and behaviour. NuxGame offers a turnkey solution for online gambling that allows you to integrate an authorization process for each ticket, which includes setting a predetermined threshold limit, checking real-time odds and other parameters before approval.
Based on risk thresholds, the system accepts a betting ticket, rejects it, or sets a threshold value.
As sports betting platforms cannot afford downtime without seriously impacting their business, NuxGame provides 24/7 risk management tools to keep gambling services running smoothly.
Competent risk management in gambling ensures stability, profitability and business success both at the moment and in the long term.
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